XTX’s 2017 Profits Remained Flat Amid Low Volatility

XTX Markets’ annual report and financial statements for the year ended 31 December, 2017, show that its year-on-year profit remained largely flat at £60.98 million. In 2016 it reported a profit of £60.46 million.

In the financial documents, Alex Gerko, founder and CEO of XTX Markets, said that the profits generated last year met expectations, given the lack of volatility in the markets.He added that, rather than just profit, the key performance indicators for the company are the net trading revenues and the profit before tax.

“Revenues have grown 17%, driven by the company’s expansion into new markets and products and optimisation of existing strategies. The company’s trading strategies seek to take advantage of pricing movements in global securities that would be accentuated in periods of higher volatility in the underlying markets and securities in which the company opts to trade. Given the relatively low levels of volatility in global markets throughout the year ended 31 December 2017 and the factors described above, the directors consider that the profits generated from the company’s trading activities are in line with expectations,” said Gerko in the document.

While XTX’s revenues did indeed jump from £131.88 million to £154.57 million year-on-year, its administrative expenses also increased significantly, going from £56.77 million in 2016 to £80.37 million in 2017. Meanwhile, the firm’s “finance expense” jumped from £12,000 in 2016 to £482,000 last year, mainly driven by interest expense.

“The Company’s costs have grown in line with the planned expansion of business during the year and the directors consider these costs to be appropriate given the levels of business activity during the year, with costs predominantly driven by technology infrastructure costs, market data and variable compensation costs,” said Gerko in the report.

XTX’s net profit after tax margin for 2017 was 39%, down from 46% the previous year, while shareholder equity increased by 23% over the same period of time, “due to the retained profit for the year”. The company’s return on assets was 24% last year, down slightly from 27% in 2016.

“The company intends to continue its strategy of expansion of trading activities into further markets, and is expected to continue trading profitably to support organic growth,” said Gerko in the report, adding: “The directors do not anticipate any changes in the company’s core activities for the foreseeable future.”